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An Act To Improve Oversight of Insurance Rates and Ensure Consistency with Federal Law
Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas,  health insurance rates for individuals and small employers in certain areas of the State have been significantly increased because of changes in rating laws made by Public Law 2011, chapter 90; and
Whereas,  individuals and small employers need relief from rising health insurance premiums; and
Whereas,  this bill rescinds changes made by Public Law 2011, chapter 90 and requires prior approval and advance review of individual and small group health insurance rates; and
Whereas,  in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Be it enacted by the People of the State of Maine as follows:
PART A
Sec. A-1. 24-A MRSA §2736-C, sub-§2-B, as amended by PL 2011, c. 364, §7, is further amended to read:
 
2-B. Optional guaranteed loss ratio.   Notwithstanding section 2736, subsection 1 and section 2736-A, at the carrier's option, rateRate filings for a carrier's credible block of individual health plans maymust be filed in accordance with this subsection. Rates filed in accordance with this subsection are filed for informational purposes unless rate review is required pursuant to the federal Affordable Care Act.
 
A. A carrier's individual health plans are considered credible if the anticipated average number of members during the period for which the rates will be in effect meets standards for full or partial credibility pursuant to the federal Affordable Care Act. The rate filing must state the anticipated average number of members during the period for which the rates will be in effect and the basis for the estimate. If the superintendent determines that the number of members is likely to be less than needed to meet the credibility standard, the filing is subject to section 2736, subsection 1 and section 2736-A.
 
B. On an annual schedule as determined by the superintendent, the carrier shall file a report with the superintendent showing the calculation of rebates as required pursuant to the federal Affordable Care Act, except that the calculation must be based on a minimum medical loss ratio of 80% if the applicable federal minimum for the individual market in this State is lower. If the calculation indicates that rebates must be paid, the carrier must pay the rebates in the same manner as is required for rebates pursuant to the federal Affordable Care Act.
Sec. A-2. 24-A MRSA §2736-C, sub-§5, as amended by PL 2011, c. 90, Pt. D, §3, is further amended to read:
 
5. Loss ratios.  Except as provided in subsection 2-B, forFor all policies and certificates issued on or after the effective date of this section, the superintendent shall disapprove any premium rates filed by any carrier, whether initial or revised, for an individual health policy unless it is anticipated that the aggregate benefits estimated to be paid under all the individual health policies maintained in force by the carrier for the period for which coverage is to be provided will return to policyholders at least 65% of the aggregate premiums collected for those policiesthe minimum medical loss ratio satisfies the requirements for individual health plans in section 4319, as determined in accordance with accepted actuarial principles and practices and on the basis of incurred claims experience and earned premiums. For the purposes of this calculation, any payments paid pursuant to former section 6913 must be treated as incurred claims.
PART B
Sec. B-1. 24-A MRSA §2808-B, sub-§2-A, ¶C, as amended by PL 2007, c. 629, Pt. M, §6, is repealed.
Sec. B-2. 24-A MRSA §2808-B, sub-§2-B, as amended by PL 2011, c. 364, §15, is further amended to read:
 
2-B. Rate review and hearings.  Except as provided in subsection 2-C, rateRate filings are subject to this subsection.
 
A. Rates subject to this subsection must be filed for approval by the superintendent. The superintendent shall disapprove any premium rates filed by any carrier, whether initial or revised, for a small group health plan unless it is anticipated that the aggregate benefits estimated to be paid under all the small group health plans maintained in force by the carrier for the period for which coverage is to be provided will return to policyholders at least 75% of the aggregate premiums collected for those policies, as determined in accordance with accepted actuarial principles and practices and on the basis of incurred claims experience and earned premiums. For the purposes of this calculation, any payments paid pursuant to former section 6913 must be treated as incurred claims.
 
B. If at any time the superintendent has reason to believe that a filing does not meet the requirements that rates not be excessive, inadequate or unfairly discriminatory or that the filing violates any of the provisions of chapter 23, the superintendent shall cause a hearing to be held. Hearings held under this subsection must conform to the procedural requirements set forth in Title 5, chapter 375, subchapter 4. If a filing proposes an increase in rates in a small group health plan, the superintendent shall cause a hearing to be held at the request of the Attorney General. In any hearing conducted under this paragraph, the insurer has the burden of proving rates are not excessive, inadequate or unfairly discriminatory. The superintendent shall issue an order or decision within 30 days after the close of the hearing or of any rehearing or reargument or within such other period as the superintendent for good cause may require, but not to exceed an additional 30 days. In the order or decision, the superintendent shall either approve or disapprove the rate filing. If the superintendent disapproves the rate filing, the superintendent shall establish the date on which the filing is no longer effective, specify the filing the superintendent would approve and authorize the insurer to submit a new filing in accordance with the terms of the order or decision.
 
C. When a filing is not accompanied by the information upon which the carrier supports the filing or the superintendent does not have sufficient information to determine whether the filing meets the requirements that rates not be excessive, inadequate or unfairly discriminatory, the superintendent shall require the carrier to furnish the information upon which it supports the filing.
 
D.  A carrier that adjusts its rate shall account for the savings offset payment or any recovery of that savings offset payment in its experience consistent with this section and former section 6913.
Sec. B-3. 24-A MRSA §2808-B, sub-§2-C, as amended by PL 2011, c. 364, §16, is repealed.
PART C
Sec. C-1. 24-A MRSA §2736-C, sub-§2, ¶C-1, as enacted by PL 2011, c. 90, Pt. A, §2, is amended to read:
 
C-1. A carrier may vary the premium rate due to geographic area in accordance with the limitation set out in this paragraph. For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or afterbetween July 1, 2012 and June 30, 2013, the rating factor used by a carrier for geographic area may not exceed 1.5.
Sec. C-2. 24-A MRSA §2736-C, sub-§2, ¶D, as amended by PL 2011, c. 364, §4, is further amended to read:
 
D. A carrier may vary the premium rate due to age and tobacco use in accordance with the limitations set out in this paragraph.
 
(1) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between December 1, 1993 and July 14, 1994, the premium rate may not deviate above or below the community rate filed by the carrier by more than 50%.
 
(2) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 15, 1994 and July 14, 1995, the premium rate may not deviate above or below the community rate filed by the carrier by more than 33%.
 
(3) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 15, 1995 and June 30, 2012, the premium rate may not deviate above or below the community rate filed by the carrier by more than 20%.
 
(5) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 1, 2012 and December 31, 2013June 30, 2013, the maximum rate differential due to age filed by the carrier as determined by ratio is 3 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(6) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2014 and December 31, 2014, the maximum rate differential due to age filed by the carrier as determined by ratio is 4 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(7) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after January 1, 2015, the maximum rate differential due to age filed by the carrier as determined by ratio is 5 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(8) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or afterbetween July 1, 2012 and June 30, 2013, the maximum rate differential due to tobacco use filed by the carrier as determined by ratio is 1.5 to 1.
Sec. C-3.  24-A MRSA §2736-C, sub-§2, ¶D-1  is enacted to read:
 
D-1.  A carrier may vary the premium rate due to age, geographic area and tobacco use in accordance with the limitations set out in this paragraph. For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after July 1, 2013, the maximum rate differential due to age, geographic area and tobacco use filed by the carrier as determined by ratio is 3 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age. The superintendent shall adopt rules regarding rating based on tobacco use setting forth rating methodologies and standards that are consistent with the federal Affordable Care Act and do not permit rate variation that would penalize an individual who participates in a smoking cessation program offered or approved by the carrier or who is not provided the opportunity to participate in a smoking cessation program by the carrier. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
Sec. C-4. 24-A MRSA §2736-C, sub-§2, ¶I, as amended by PL 2011, c. 364, §5, is further amended to read:
 
I. A carrier that offered individual health plans prior to July 1, 2012 may close its individual book of business sold prior to July 1, 2012 and may establish a separate community rate for individuals applying for coverage under an individual health plan on or after July 1, 2012. If a carrier closes its individual book of business as permitted under this paragraph, the carrier may vary the premium rate for individuals in that closed book of business only as permitted in this paragraph and paragraphs C and C-1.
 
(1) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 1, 2012 and December 31, 2012, the maximum rate differential due to age filed by the carrier as determined by ratio is 2 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(2) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2013 and December 31, 2013June 30, 2013, the maximum rate differential due to age filed by the carrier as determined by ratio is 2.5 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(3) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2014 and December 31, 2014on or after July 1, 2013, the maximum rate differential due to age, geographic area and tobacco use filed by the carrier as determined by ratio is 3 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age. The superintendent shall adopt rules regarding rating based on tobacco use setting forth rating methodologies and standards that are consistent with the federal Affordable Care Act and do not permit rate variation that would penalize an individual who participates in a smoking cessation program offered or approved by the carrier or who is not provided the opportunity to participate in a smoking cessation program by the carrier. Rules adopted pursuant to this subparagraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
 
(4) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2015 and December 31, 2015, the maximum rate differential due to age filed by the carrier as determined by ratio is 4 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(5) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after January 1, 2016, the maximum rate differential due to age filed by the carrier as determined by ratio is 5 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(6) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or afterbetween July 1, 2012 and June 30, 2013, the maximum rate differential due to tobacco use filed by the carrier as determined by ratio is 1.5 to 1.
 
The superintendent shall direct the Consumer Health Care Division, established in section 4321, to work with carriers and health advocacy organizations to provide information about comparable alternative insurance options to individuals in a carrier's closed book of business.
Sec. C-5. 24-A MRSA §2808-B, sub-§2, ¶C-1, as enacted by PL 2011, c. 90, Pt. A, §7, is amended to read:
 
C-1. A carrier may vary the premium rate due to geographic area in accordance with the limitation set out in this paragraph. For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or afterbetween October 1, 2011 and June 30, 2013, the rating factor used by a carrier for geographic area may not exceed 1.5.
Sec. C-6. 24-A MRSA §2808-B, sub-§2, ¶D, as amended by PL 2011, c. 638, §2, is further amended to read:
 
D. A carrier may vary the premium rate due to age, group size and tobacco use only under the following schedule and within the listed percentage bands.
 
(1) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 15, 1993 and July 14, 1994, the premium rate may not deviate above or below the community rate filed by the carrier by more than 50%.
 
(2) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 15, 1994 and July 14, 1995, the premium rate may not deviate above or below the community rate filed by the carrier by more than 33%.
 
(3) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between July 15, 1995 and September 30, 2011, the premium rate may not deviate above or below the community rate filed by the carrier by more than 20%.
 
(4) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between October 1, 2011 and September 30, 2012, the maximum rate differential due to age filed by the carrier as determined by ratio is 2 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(5) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between October 1, 2012 and December 31, 2013June 30, 2013, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 2.5 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(6) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2014 and December 31, 2014, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 3 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(7) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2015 and December 31, 2015, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 4 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(8) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after January 1, 2016, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 5 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(9) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or afterbetween October 1, 2011 and June 30, 2013, the maximum rate differential due to tobacco use filed by the carrier as determined by ratio is 1.5 to 1.
Sec. C-7.  24-A MRSA §2808-B, sub-§2, ¶D-3  is enacted to read:
 
D-3.  A carrier may vary the premium rate due to age, group size, geographic area and tobacco use in accordance with the limitations set out in this paragraph. For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after July 1, 2013, the maximum rate differential due to age, group size, geographic area and tobacco use filed by the carrier as determined by ratio is 3 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age. The superintendent shall adopt rules regarding rating based on tobacco use setting forth rating methodologies and standards that are consistent with the federal Affordable Care Act and do not permit rate variation that would penalize an individual who participates in a smoking cessation program offered or approved by the carrier or who is not provided the opportunity to participate in a smoking cessation program by the carrier. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
Sec. C-8. 24-A MRSA §2808-B, sub-§2, ¶H, as amended by PL 2011, c. 638, §3, is further amended to read:
 
H. A carrier that offered small group health plans prior to October 1, 2011 may close its small group book of business sold prior to October 1, 2011 and may establish a separate community rate for eligible groups applying for coverage under a small group health plan on or after October 1, 2011. If a carrier closes its small group book of business as permitted under this paragraph, the carrier may vary the premium rate for that closed book of business only as permitted in this paragraph and paragraphs C and C-1.
 
(1) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between October 1, 2011 and September 30, 2012, the maximum rate differential due to age filed by the carrier as determined by ratio is 2 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(2) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between October 1, 2012 and December 31, 2013June 30, 2013, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 2.5 to 1. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(3) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2014 and December 31, 2014on or after July 1, 2013, the maximum rate differential due to age, geographic area, tobacco use and group size filed by the carrier as determined by ratio is 3 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age. The superintendent shall adopt rules regarding rating based on tobacco use setting forth rating methodologies and standards that are consistent with the federal Affordable Care Act and do not permit rate variation that would penalize an individual who participates in a smoking cessation program offered or approved by the carrier or who is not provided the opportunity to participate in a smoking cessation program by the carrier. Rules adopted pursuant to this subparagraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
 
(4) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State between January 1, 2015 and December 31, 2015, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 4 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(5) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or after January 1, 2016, the maximum rate differential due to age and group size filed by the carrier as determined by ratio is 5 to 1 to the extent permitted by the federal Affordable Care Act. The limitation does not apply for determining rates for an attained age of less than 19 years of age or more than 65 years of age.
 
(6) For all policies, contracts or certificates that are executed, delivered, issued for delivery, continued or renewed in this State on or afterbetween October 1, 2011 and June 30, 2013, the maximum rate differential due to tobacco use filed by the carrier as determined by ratio is 1.5 to 1.
Emergency clause.  In view of the emergency cited in the preamble, this legislation takes effect when approved.
 
SUMMARY
Part A of this bill restores the statutory process for advance review and prior approval of individual health insurance rates and repeals the changes to the rate review process for individual health insurance made by Public Law 2011, chapter 90.
Part B of the bill extends the same process for advance review and prior approval for small group health insurance rates.
Part C of the bill merges the rating bands for age, geographic area and tobacco use so that the combined rate differential due to age, geographic area and tobacco use may not exceed a ratio of 3 to 1 beginning July 1, 2013 for all individual and small group health insurance policies. The bill authorizes the Superintendent of Insurance to adopt rules regarding rating based on tobacco use that set appropriate methodologies and standards that are consistent with the federal Patient Protection and Affordable Care Act, as amended by the federal Health Care and Education Reconciliation Act of 2010, and do not permit rate variation that would penalize an individual who participates in a smoking cessation program or who is not provided the opportunity to participate in one.